An employee retention rate refers to the percentage of employees a business can keep, typically reported annually. Research has found profits to be 4x higher in companies with higher retention rates.
On the other hand, lack of retention can damage efforts to build a successful, competitive company. The Bureau of Labor Statistics reports that the national average turnover rate in 2020 has risen from 27% to 36.4% in a year and has increased by 88% since 2010.
The solution isn't always obvious, so here are 7 ways to increase employee retention if your retention rate is low.
1. Exit Interviews
Exit interviews can be an excellent way to figure out why people leave by asking those who do leave. They can help provide you with constructive feedback, invaluable advice on how to change things, and insight into what matters most to them in the workplace. From there, you can evaluate all of your answers and begin making changes where necessary.
2. Culture of Recognition
It is the age of recognition, and employees are demanding it in exchange for their hard work and commitment to your company. ProofHub reports that 68% of US employees were either not engaged or actively disengaged from work. When asked how to improve engagement, 58% of professionals pointed to 'employee recognition.'
Something as simple as "employee of the month" can create a competitive, group spirit that raises individual feelings of worth when it comes to the workplace. Recognition can even come in the form of free appreciation like saying “thank you.” A Rewards Gateway survey found that 75% of U.S. employees surveyed agreed that motivation and company morale would improve if managers simply thanked workers in real-time for a job well done.
Employee recognition doesn't take much to give, but it is a powerful component of a successful business.
3. Hiring for Cultural Fit
Instead of focusing on a potential employee hitting certain standards on a resume, choose people that fit in well with other employees and core company values.
Cultural fit doesn't mean culturally homogenous. Don't hire people just because they appear or act like others in the company. Instead, look towards how they interact with employees and whether they seem engaged.
LinkedIn suggests these five ways to measure cultural fit:
- Pace - How they make decisions, how cautious they are, how they deal with ambiguity, etc.
- Degree of structure - Vet how well they deal with different degrees of structure (heavily structured, flexible, quick response, etc.).
- Managerial fit - Where they've excelled and what role their manager played in it (to reduce conflicts).
- Job fit - Clarify job expectations and gauge reactions.
- Adaptability - Can they adapt to company changes as it grows over time, including taking on bigger roles?
4. Team Building Activities
Creating a sense of being a team helps employees stay motivated to work in a particular company. According to Indeed, it also can "create happier, better-connected team members [because] they get a better understanding of each other's personality and strengths."
Some team building Activities ideas to get you started:
- Memory Wall - shared memories between team members.
- Office Trivia - breaks the ice and builds relationships.
- Two Truths and a Lie- A fun way to get to know each other.
Perks are another component of employee satisfaction that is often overlooked but incredibly important to employees. It shows that your business is invested in its employees' health and happiness - both in and outside the workplace. This can include casual Fridays, freebies, flexible hours, 'donut' days, employee outings, and more.
Even a small gesture like providing free snacks can go a long way in helping employees decide to stay versus another company where perks aren't offered. According to a study reported by LeanBox, companies that provide free food have happier employees than those that do not. Better yet, the study also showed that 66% of millennials say that if they were offered a job at a company with better perks, including snacks, they'd take it.
6. Open Door Policy
An open-door policy ensures employees feel their voices are being heard. When employees feel like their voices are being heard, they are more likely to be more engages — therefore, more likely to stay.
Forbes explains that "increased engagement [doesn't] require astronomical budgets [but rather] solid policies and leadership accountability, [so] swing those doors wide open."
An open-door policy allows employees to have access to management and leaders to resolve any issues that might be holding them back from productivity. It benefits both parties because it encourages open communication and feedback, making employees feel more valued.
7. Improve Health Benefits
Competitive benefit packages are key to remaining competitive and relevant in hiring and retaining employees. According to the National Health Benefits Statistics & Trends Report, health insurance is the key to employee retention, with 85% of millennials saying that health care is "absolutely essential" or "very important."
You can even get improved benefits at better prices by partnering with a Professional Employer Organization. That enables you to gain access to benefits negotiated at scale by experts.
There's nothing more important to your business's growth and success than the employees who work hard to make it that way. Increasing employee retention ensures your business can run smoothly and efficiently.